We've Been Here Before

New Ground 67
Autumn 2004

Labour’s Failure to Back Corporate Accountability is a Sign of Lost Direction

In the nineteenth century, workers – mostly in Northern Europe – realised that by organising themselves into trades unions, collectivising their negotiating power, they could win back the basic rights denied to them by employers.

In Britain, trade unions gave rise to a political movement that became the Labour Party. The formation of a political party for workers became a necessity because, on their own, marches and strikes weren’t bringing about change. Workers needed democratic representation, to be in government and to make laws to protect workers’ rights. "Direct action" (through the withdrawal of labour), public campaigning and the mobilising of hearts and minds logically progressed into the formation of a political body that could codify rights and create legislation to protect those rights.

As this Labour movement progressed into the twentieth century and its political horizons broadened, it made the intellectual connections between the excesses of capitalism at home and of colonialism abroad. Demands for independence for the Indian subcontinent and opposition to the apartheid regime in South Africa sat logically alongside demands for greater equality in the workplace and equity in society as a whole.

Labour has continued to be an effective political movement into the twenty-first century because it has, at each crucial stage of its evolution, retained three fundamental elements of its character:

The ability to mobilise hearts and minds of people denied basic rights or, more recently (in 1997), to appeal to a general sense of injustice felt by a large swathe of the electorate and give people a sense that they will be represented.
The tradition of linking issues of social justice (which hinge on an acceptance of the idea of "society" in the first place) to ideas about how social injustices are overturned using legislation and government.
The experience to reform and rethink laws and the institutions of government, as the country and the world change.

Many people are now wondering whether the decade-old New Labour project has broken its covenant with the people of Britain, and the rank and file membership of the Party, on all three counts. They find it difficult to relate the invasion of Iraq or the creeping marketisation of public services to their traditional values.

In the twenty-first century, the era of globalisation, chains of production stretch as far as they did in the nineteenth century, if not farther. The workers and communities who need representation can’t march on the City of London or Wall Street, or even to the Viceroy’s residence in Calcutta. In their place, a vast, amorphous "civil society", made up of everything from charities like Oxfam to radical anarchists, has sprung up.

Significantly, there is an emerging meeting of minds between the development groups (who want people to not be so poor) and the human rights and environmental groups (who want people to be less exploited and less surrounded by pollution). This argument, based on codifying social and economic human rights – and the idea that these rights should be in some sense enforceable – is being bolstered by the decision of the new International Criminal Court to investigate the role of mining companies in perpetuating the war in the Congo.

Yet the UK’s government’s response to the ideas emanating from this "movement" within a broader, civil society seems in keeping with the shift by New Labour away from a tradition of ideas and social solidarity and towards a culture of short-term fixes and political expediency.

Recently, a broad group of respectable charities and pressure groups banded together to try to get legislation passed to place reporting by corporations on their own social and environmental impacts on some sort of standardised and regulated basis. The government talked the CORE Bill out of time in this parliament. Yet the alternative championed within government – the morass of voluntary codes of conduct and audit standards, generally referred to by the acronym CSR (Corporate Social Responsibility) – is increasingly proving to be a flawed basis for public policy.

A recent UN publication, "Barricades and Boardrooms", written by British academic and entrepreneur Dr. Jem Bendell, analyses CSR initiatives and finds them wanting in two key ways. Firstly, CSR initiatives are of "defective scope". For example, there are 60,000 transnational corporations in the world, while fewer than 500 have issued reports on their social and environmental performance using the guidelines of the Global Reporting Initiative (GRI). Even when NGOs do manage to change corporate practice, this is limited to those companies with high-profile brands, or suppliers to high-profile brands. Secondly, voluntary action maintains a "democratic deficit". This is because CSR initiatives are driven by the concerns of western NGOs and what large corporations are happy to do, not what is in the best interests of the people who are meant to benefit from improved corporate practices.

The UK government has played this very game that the UN report criticises. The UN Sub-Commission for Human Rights spent years codifying the international duties to uphold the human rights principles of business, producing a set of UN norms, under existing covenants and treaties. Despite our government’s professed support for CSR and the role of multilateralism, its unelected diplomats in Geneva buckled under pressure from corporate lobbying, and supported a decision at the UN High Commission for Human Rights to have the norms dismissed. To my knowledge, the norms weren’t debated by the Labour party as part of any of its policy reviews. This is probably the first time most SERA members have read about them.

The government does not have to follow the lowest common denominator of corporate opinion. Progressive business leaders actually see the need for more mandatory measures on corporate accountability, argues the author of the UN report, Dr. Bendell. "As the weakness of the commercial case for going it alone with CSR begins to be seen, some executives are realising that the responsibility of one is to work towards the accountability of all." In addition, Dr Bendell argues that "some institutional investors are realising that major problems like AIDS, climate change, and poverty actually pose threats to long-term business success, and to combat them will require all companies to respond, not just a few companies seeking an ethical profile."

Consequently some companies, like the Co-op Bank, are disclosing their political lobbying activities, with the aim of encouraging other companies to do the same. If New Labour prides itself in understanding business, why has it missed out on some of the latest strategic thinking from business leaders?

SERA and the new movement for corporate accountability should reach out to each other. Just as the organisation of the trades union movement led to a global revolution of workers’ rights, the global revolution in corporate accountability is underway, at least intellectually. Becoming part of this wave of revolutionary ideas will continue the Labour tradition and give the movement new life and purpose.

Corporations are here to stay. The downtrodden masses of the world probably won’t rise up in revolution and replace capitalism with something nicer, but carry on being poor, marginalised and miserable unless the growing power of corporations is made accountable in law for what they do, wherever they do it. Tim Concannon, Director, Stakeholder Democracy Network.